No. 12102 INTHE SUPKEME COURT OF THE STATE OF MONTANA 1972

WILLIAM B. HULL, Plaintiff and Appellant,

-VS

## - NORTH VALLEY HOSPITAL, Defendant and Respondent.

Appeal from: District Court of the Eleventh Judicial District, Honorable Robert Sykes

## ,Judge presiding. Counsel of Record: For Appellant: McGarvey, Morrison, White & Hedman, Whitefish,

Montana. Frank B. Morrison, Jr. argued, Whitefish, Montana. For Respondent: Murphy, Robinson, Heckathorn & Phillips, Kalispell,

Montana. I. James Heckathorn argued, Kalispell, Montana. AMICUS CURIAE-Montana Hospital Assoc. Chadwick Smith argued, Helena, Montana.

Submitted: February 17, 1972 Decided : 

## JUH

## -9 

### 1972

Filed: 

### JUN

## -9 1972Mr. Justice Gene R, Daly delivered the Opinion of the Court.

This isan appeal from entry of a directedverdict for defendant ina negligence actionbrought by plaintiff William B. Hull against defendant North Valley Hospital of Whitefish, Montana. The actionwas brought inthe district court of the eleventhjudicial district, county of Flathead, torecover damages forpersonal injury sufferedby plaintiff by reason of the negligence of his family physician, while plaintiff was a patient indefendant hospital, At the conclusion of plaintiff's
case, the trialjudge sustained defendant's motion todismiss and from that judgment plaintiff appeals. The principals involved herein are: North Valley Hospital, defendant and respondent, hereinafter referred to as "Hospital"; William B. Hull, plaintiff and appellant; Doctor David V, Kauffman, William B. ~ull's family physician; the Board of Directors of the Hospital, hereinafter referred toas "Board of Directors; and the private physicians practicing inthe surrounding area who utilize the Hospital for patient care, hereinafter referred to as the "medical staff". The Hospital isa private, nonprofit corporation operated 5y a Board of Directors made up of community volunteers with no paid staff of doctors or interns. The Hospital on June 13, 1966, adopted bylaws creating a hospital structuredesigned toregulate the conduct of the medical staff. It was necessary to create such hospital organization to comply with the standard forhospital accreditation,

more specifically the Joint Commission on Accreditation of Hospitals. In part, those bylaws are: MEDICAL STAFF

TISection 1. The Board of Directors shallappoint a medical and dental staff composed of physicians and dentistswho are graduates of recognized medical or dental schools, legally licensed topractice in the State of Montana, a member ingood standing inthe localmedical or dental society, and practicing in the community or within a reasonabledistance of the hospital, and shall see that they are organized into a responsible administrativeunit, and adopt suchby-laws, rules and regulations for government of their practice in the hospital as the Board of Directors deem to be the greatestbenefit to the care of patientswithin the hospital. In the case of the individual patient, the physician or dentist duly appointed to the medical staff shallhave full authority and responsibility for the care of that patient subject only to such limitations as the Board of Directorsmay formally impose and to the bylaws, rules and regulations for the medical and dental staff adopted by the staff and the Board of Directors.

"Section 

### 4. In any casewhere the medical committee of the Board of Directors or the Credential Committee of the medical staff does not recommend termination of appointment, or imposes limitationswith respect to the exercise of privileges requested, or where reduction of privileges is recommended, or a request for additionalprivileges denied, the Credential Committee of the medical staff should so notify, in writing, the physician concerned. That within ten



### (10) days of receipt of the above notice the physician may request, inwriting, to the administrator of the hospital, reconsiderationand, an opportunity to appear before the Joint Conference Committeemade up of three

(3) members of the medical staff and three (3) members of the Board of Directors. 

### A decision to grant this hearing should be made within ten (10) days after the receipt of the request by the Joint Conference Committee. The Joint Conference Committee shall then,after said hearing,make their recommendation to the Board of Directors and their decision shallbe final." 

### "ARTICLE IV COMMITTEES OF THE BOARD OF DIRECTORS

"Section 

### 4. TheMedical Committee shall consist of three (3) members of the Board of Directors. 

### his committee shall:

11

### (1) Receive recommendations from themedical staff and make final recommendations to the Board of Directors on all appointments to, and assignments of responsibilitieswithin, the medical staff of the hospital. "(2) Recommend to the Board of Directors the types of professionalwork to be permitted to be done by eachmember of the medical staff. "(3) Recommend to the Board of Directors all rules and regulations for the government of the medical staff, or amendments thereto, necessary to assure the proper care of the patients.

### "(4) Receive and make recommendationsto the Board of Directors respecting any communications, requests or recommendations presented by the medical staff through its duly authorized representatives. "(5) Together with an equal number of representatives from the medical staff, constitute the Joint Conference Committee a liaison group,which, with the administrator,will discussmedical administrativematters and be the official point of contact among the Board of Directors,administrator, and medical staff. "(6) Receive and consider all reports on the work of the medical staff and make such recommendations to the Board of Directors in respect thereto as the committee considers to be the best interests of the hospital and its patients. II Within the medical staff itself, there arevarious committees including: 

### (I) the executive committee consisting of the president, vice-president,and secretary of themedical staff; and (2) the record review committeewhich regularly reviews the charts of the various doctors. Discrepancies in the charts may either be called to the attention of the doctor responsible
or, in instances requiring further action, the matter may be referred to the executive committee. In seriousmatters, the entiremedical staff is consulted to decide if the situation warrants disciplinary action or restriction of privileges. In such cases, the executive committee or the medical staffwould make formal recommendation to the Board of Directors. The ultimate authority for granting revoking privileges restswith the Board of Directors. The administrator of the Hospital acts as the liaison officer between themedical staff and the Board of Directors. Information relative to doctors' qualifications tohave certainprivilegescanes from an investigation made by the medical records review committee. Privileges extended to doctors practicing in the Hospital, subject to annual reviewbefore renewal, are: (1) surgical, (2) medical, and 

### (3) obstetrical. Doctor David

### V. Kauffman is a licensed physician practicing inWhitefish, and during all times pertinent hereinwas a member of the medical staff of the Hospital. Since 1964 or 1965,Dr.Kauffmanhas been the family physician for William B. Hull, plaintiff herein,who in July 1969 injured his left knee when he tripped over an air hose at his automotive repair shop. On July 28, 1969,Hull consulted with Dr. Kauffmanwho initially treated the knee with heat treatments, but after consultation with Dr. 

### W. F. Bennett surgerywas recommended to repair the knee. On August 12, 1969,plaintiffwas hospitalized at the Hospital, inWhitefish. On August 13, 1969, surgerywas performed by Dr. Kauffman and Dr. Bennett. The operation consisted of removal of cartilage from inside the left knee joint. Following surgery, plaintiff spent four days in the Hospital and was discharged onAugust 17. Two days later plaintiff returned to Dr. Kauffman's office to have surgical stitches removed and pus was then draining from the knee. Dr. Kauffman administered penicillin salve to counteract the draining. Plaintiff testified at trial that throughout the last two weeks ofAugust 1969,Dr. Kauffman administered antibiotics which had no apparent effect in improving plaintiff's condition. On September 

### 2, 1969,plaintiffwas readmitted to the Hospitalby Dr. Kauffman and 

### X ray on the kneewas done by Dr. Bennett. Dr. Bennett was listed on the Hospital case records as

an associate with Dr. Kauffman,and it is conceded in the record that Dr. Bennett is competent and skilled. On September 3, Dr. Kauffman, unassisted by Dr. Bennett or othermedical staff,performed a second operation on plaintiff's knee. This operation

was termed a "debridement". At trial a description of the second operationwas given by witness Dr. Theodore Sanford as: 

## "* ;k Jc the findings: stitch reaction, draining infectedwound. What was done: the skin wound was opened, all of the old stitches removed, debridement of the wound edges. Debridementmeans removal of dead tissue---debridementofwound edges and then repaired with number thirty-twowire, stainless steelwire. The skinwas closedwith four 

### oh nylon subcutaneous,that's just underneath the skin. 7k

## *

# *". (Emphasis supplied)Witness Sanford further testified that "stitch reactionr' as diagnosed by Dr. Kauffman,differed from a general infection of the joint, subsequently found to be the correct diagnosis. It was established that this misdiagnosis, treatment, or lack of proper treatment, eventually caused plaintiff's injuries. We find it unnecessary to pursue thismatter in detail as plaintiff claims that defendant Hospital is liable in allowing Dr. Zbuffman to practice in the Hospital. It isnot claimed that any employee of Hospitalwas negligent in the course of treatment

nor that any relationship exists between Dr. Kauffman and Hospital that would make Hospitalvicariously liable forhis acts. Dr. Kauffman'snegigence is admitted and the record reflects

a settlement of plaintiff's claim against him prior to trial of the instant case. The record discloses that during the 1960's and prior to 

### plaintiff's hospitalization at Hospital, Dr. Kauffman had privileges reviewed by the heretofore described authorities of Hospital and at various timeshis privileges to do surgery had been revoked and then reinstated. On prior occasions Dr. Kauffmanhad surgical privilegeswith restriction,aswas testified to by the Hospital administrator, Olga Torgerson. She also stated that Dr. Kauffman's privileges to do surgerywere restored in 1967,but prior to that time he had been limited to minor surgery and Dr. Kauffman had acquiesced to such supervision. Defendant's motion for a directed verdict was granted for the following reasons: "1. That there is no statutoryduty or obligation on a non-profit corporation operating as a hospital to prevent the practice of any duly licensed physician and surgeon inMontana. "2. That the provisions pertaining to the practice of medicine under the statutory authorities and any curtailment thereof appears in Title 66,Chapter 10 of the Revised Codes of Montana more particularly knownas The Medical PracticeAct.

### "3. That the restrictionsand limitations of practice of members of themedical staff of the Defendant,North Valley Hospital, is provided by the By-laws and as applied to the evidence submitted in this case shows a complete failure on the part of the Plaintiff to establish any duty owed by the hospital to the Plaintiff as a patient thereof and any liabilityresulting from such a breach of duty by the hospital to the Plaintiff for the following reasons: "A. That at the times of the alleged acts of Dr. Kauffman,hehad fullprivileges as a member of the staff.

1lB, That therewas no recommendation as provided by the By-Laws for restriction of privileges of Dr. Kauffman submittedby the executive committee of the staff to the medical committee of the governing body of the hospital.

11C. That there isno showing of any receipt of such notice or request for hearing before the medical committee

asmore particularly provided for in the said By-Laws. "D. That under the By-Laws and duties relating to the administrator of the hospitalno such duty or obligation

was imposed upon the administrator or any individualmember of the Board of Directors, "E. That any failure to submit recommendations by the credentials committee of the medical staff or the executive committee did not impose a duty upon the Board of Directors pertaining to the limitation of practice on the part of Dr. Kauffman and any liability that might have resulted there-



# .from.II Appellant presents a number of issues on appealwhich canbe reduced to two controlling issues for our discussion: 1. Was Hospital negligent inpermitting Dr. Kauffman to use its facilities inministering to his patients in light ofhis previous record?2. Is the medical staff of North Valley Hospital an arm of the hospital organization and are the acts or omissions of the medical staff acts or omissions of the hospital? Appellant states the question of duty as: 

### "*

# ** whether the hospital has a duty to see that surgical privileges are extended to only those doctors who have shown an acceptable degree of competency to perform surgery

# *

# * *I1 

# . Further, in view of the circumstances of this case, 

# **whether Dr, Kauffman shouldhave been permitted to do this surgery without supervision

or assistance.1I By statute,Montana has provided for licensing and supervision of the medical profession under the Medical PracticeAct, sections 66-1010through 66-1049,R.C.M. 1947,and responsibility for supervision is delegated to the Board of Medical Examiners. Section 66-1011,R,C.M. 1947,provides: "Purpose of Medical PracticeAct. It is hereby declared,as a matter of legislative policy in the state ofMontana, that the practice ofmedicine within the state ofMontana is a privilege granted by the legislative authority and isnot a natural right of individuals and that it is deemed necessary, as a matter of such policy and in the interests of the health, happiness, safety and welfare of the people ofMontana, to provide laws and provisions covering the granting of that privilege and its subsequent use, control and regulation to the end that the public shallbe properly protected against unprofessional, improper,unauthorized and unqualified practice of medicine and to license competent physicians to practice medicine and thereby provide for the health needs of the people ofMontana. 1I Section 66-1013,R,C,M. 1947, creates the Montana State Board ofMedical Examiners. Section 66-1016. R.C,M. 1947, states the policy of super-

b I vision of physicians for the of the generalpublic of the state ofMontana: "Policy, 

### The board shallmaintain reasonableand continuing supervision and surveillance over all licensees under this act to ensure that such licensees maintain standards of conduct and exercise the privileges granted hereunder in the greatest public interest and to carry out the purposes and provisions of this act, IISection 66-1022,R.C.M. 1947,provides for licensing the extent of practice permitted and specifically stateshow the practice of a physician may be limited:

IIStatement as to practice permitted. The certificates issued shall state the extent and character of the practice that is permitted, and shallbe in the formprescribed by theboard. Neither the privileges nor the obligations granted to or imposed upon licensees may be altered except by legislative enactment or by action of the board duly authorizedhereunder." Respondent Hospital argues that the matter for allpractical purposes is controlledby statute and the authority to police is exclusivewith the state. Further, the so-called "Thompson Act", sections 94-3557and 94-3558,R.C.M. 1947,provides a criminal penalty if respondentwere to attempt to regulate or limit a medical doctor. Section 94-3557provides: "Discrimination by hospitals forbidden. Every person, persons, corporation or association conducting a hospital or hospitalsnot held for private or corporate profit or a hospital or hospitals that are institutions of purely public charity, that exempt themselves or are exempted from any state, county ormunicipal tax by reason thereof, shallnot in any manner discriminate between the patients of any regularly licensed physician by reason of the fact that said physician isnot a member of the medical staff of said hospital, or for any other reason,and suchhospitals are hereby compelled to admit and care for the patients of any regularly licensed physician or physicians under the same terms and conditions asmay be promulgated by the management oi said hospital for the patients of any other regularly licensed physician." (Emphasis supplied) At the onset,we decline to associate the intent of the "Thompson Act" with the problemhere. Respondent and Amicus Curiae,Montana Hospital Association,rely on the words "for any other reason" to support theirview, but overlook the language that follows to the end of the section. This language clearly demonstrates that one set of rules shall apply to all doctors to prevent discrimination,whatever the rule. In support ofhis contentions,appellant relies almost entirely on a 1965 decision of the Illinois Supreme Court, Darling

v. Charleston Comrn. Memorial Hosp., 33 I11.2d 326, 211 N.E.2d 253. Appellant argues this is the leading case that establishes thethe duty owed the patient by the hospital toregulate its staff members and that the hospital's bylaws, standards, and regulations define the duty or standard of care owed the patient. A close examination of appellant's authority reveals some distinguishing differences from the factual situation inthe instant case. In Darling an 18 year oldboy with a broken leg

was taken to the hospital emergency room and treated by a doctor

on duty. This doctor was not employed by the plaintiff, but rather by the hospital and furnished by the hospital. In other words, the doctor inDarlingwas an employee of the hospital and the court's holding c~loaning the hospital's duty to supervise "staff" ' doctors isbased on respondeat superior and staff doctors there should be distinguished from unpaid "staff" doctors in,Montana, This isnot too clear from the language of the court in Darling, but in a later case in the same jurisdiction, Lundahl v. Rockford Memorial Hosp,Assn., 93 Ill.App.2d 461, 235 N.E.2d 671, 674, wherein the allegednegligence was failure of the hospital inits duty to act inrequiring consultation and supervision, the same court cited Darling and said: "The plaintiffs citethe Darling case (ibid) in support of their contention that the hospitalwas negligent inits failure to require consultation between Dr, Paynter and the members of its staff. In the Darling case, however, the treating physician was an employee placed by the hospital on emergency duty and subject to its supervision. Dr. Paynter was not employed by the hospital, was not an agent of it and not subject to its supervision." (Emphasis supplie Darlin~ also involved hospital care or a shocking lack of it by staff and nurses resulting inan 18 year old boy losinghis leg, Quite obviously Darlinghas a different fact situation than the case before us. Appellant also cites a Montana case, Maki v, Murray Hospital, 91Mont, 251, 7 P.2d 228, where a delirious and violent patient lefthisbed and fellfrom a third floorwindow sustaining injuries.In -3 Maki this Court very clearly stated the duty of Dr. Worden, the nurses, and the hospital to exercise reasonable skill and

care in discovering the patient's condition and takingwhatever action necessary to protect their patient. Yet,here again,we have a situationwhere the hospital employed Dr. Worden and the staff full-time,and liability is based on an employer-employee relationship as all principals involvedwere employees of the hospital. The same problem ispresent in Foley

### v. Bishop Clarkson Memorial Hospital, 185 Neb, 89, 173 N.W.2d 

### 881 (1970), where hospital employeeswere inviolation of the hospital regulations and liabilitywas found vicariously through its employees. 

## - Maki

was cited in Foley as a minority rule, but cannot be said to applybeyond respondeat superior cases. It is of further interest to note that the Nebraska Supreme Court in Foley quarrelswith the Darlingdecisionwith regard to the standard of care even in this class of cases. There the court noted that the duty owed is the exercise of that degree of care, skill and diligence used by hospitals generally in the communitywhere the hospital is located, or in similar communities. This is the majority rule and while onemay recognize the Darling rule as applying to exceptional situations, it isnot conclusive of negligence,but simply evidence of negligence. There isno question that the Nebraska court on the basis of gross failure of "employeesrf to observe regulationswhich cost a patient's life, followed the minority rule and ordered a trial. The cases cited by appellant from Washington, Florida and California are distinguishable on other grounds and we need not make further caseby case examination. It is only necessary to note that in our review of all of the case authoritywe find

a good demonstration of the analysis of the various text editors. In theAnnotation, 69ALR2d 

### 305, 321, they point out a basic fact of definitionwhich is not alwaysmade clear aswe noted inDarling and Lundahl,both authoredby the same court. They advise:

1 

# "* 9: 

# * the expression a hospital's staff' is somewhat ambiguous, since itmay conceivably refer to either 

### (1) the group of salaried medicalmen---interns. residents. - etc.---whichthe hospital employs on a fullLtimebasis; or (2) those practicing physicianswho havebeen granted the right to use the hospital's facilities for their own patients

# ** y:." (Emphasis supplied) In the same citation is an involved discussion on the application of the doctrine of respondeat superior and its application in finding a hospital negligent for a doctor's malpractice occurring in the hospital. It concludeswith this general statement at p. 309: "Sometimes this determination restsprimarily on the peculiar facts of individual cases,but there are certain general principles in this area that should be referred to. 

### In the normal situationwhere a sick or injured person consults his own doctor for diagnosis and treatment,and the latter recommends hospital care, the hospital to which the patient is admitted isnot liable for the doctor's misconduct resulting in injury to the patient, even though such misconduct takes place at the hospital, and even though certain other links between the hospital and the doctor, such as the circumstance that the latter is on the former's 'staff,' may exist. 

### "On the other hand, when a person is taken directly to a hospital, aswhere he is rendered unconscious in an accident, and a physician hired by the hospital, such as an intern or resident, is guilty ofmalpractice in diagnosing or treating such person's condition,a different situation arises, Such a physician usually stands in a position with respect to the hospital which, under the normal tests of the existence of the master-sewant relationship,would call for a ruling that he was the hospital's servant. In otherwords, such a doctor isnormally paid a salaryby the hospital, he spends all hisworking hours under the direction of the hospital's staff,he does notmaintain a practice of his own, etc., and the resultwould normallybe, and not infrequently is, that the physician must be regarded as a servant or agent of the hospital." The same princi-pleis stated anotherway in 

### 41 C.J.S. Hospitals, 5 8,p. 346: "Liability of a private hospital for the negligent acts of the members of its professional staff must be predicated on the doctrine of respondeat superior, Accordingly, a private hospital is not responsible for any default on the part of a physician or surgeon who practices his profession as an independent agent, and,where a patient employs a physician or surgeon not in the employ of the hospital, the hospital isnot I I liable forhis negligence. See also 

### 40Am Jur 2d, Hospitals & Asylums, 5 

### 28.The authorities offered all concern the duty to supervise

or require consultation on a specific case that constitutedmalpractice by a doctor or hospital personnelwith liabilitybeing established under the doctrine of respondeat superior. No authority has been cited that extends this duty to the case of

an independentcontractor. Further, there is no authority cited that even discusses the realpoint in issuehere

## ----Is the Hospitalnegligent under the ordinary rules ofnegligence for not limiting or expelling the doctor before the fact of the case ofmalpractice, and excluding any reference to the malpractice itself except in damages? A11 the citations might reasonably be construed to establish a standard of care, and are certainlynot in point with this case on negligence or duty. However, can the standards discussed heretofore in the case of a doctor employed by the hospital in a specific malpractice casebe imposed on a hospital in the long term ofbefore the fact regulation of independent staff doctors? At the risk of belabored definition, the integration of a modem hospital becomes readily apparent as thevarious boards, reviewing committees,and designation of privileges are found to rest on a structure designed to control, supervise, and review thework within the hospital. The standards of hospital accreditation, the state licensing regulations,and the respondent's bylaws demonstrate that the medical profession and other responsible authorities regard it as both desirable and feasible that a hospital assume certain responsibilities for the care of the patient. Therefore,being presented with a direct negligence issue which preexists the damage complained ofhere, and ifwe were to recognize the standard of care suggested by appellantwhich departs from the majority rule and considers a violation of the hospital bylaws as evidence of negligence, thenwe couldnot circumvent the bylaw procedures and find negligence on a vicariousbasis as suggested in issueNo. 

### 2,nor could we findnegligence based on the majority rule of "community standard". Assuming that the Board of Directors of the hospital entity has a duty to "act" when put onnotice or advised by the medical section that a doctor is incompetent to continue to practice medicine, the law recognizes that this determination must be made by medical personnel skilled inmedical sciences and competent to make this determination. In this case that was not done by the medical section or communicated to the proper Hospital authority. Kauffman's prior limitationand reinstatement in 1967, cannot be considered as negligence on this record,which fails to reveal facts at that hearing that would constitute improper procedures by the Board of Directors or that it acted contrary to medical advice. Extensive testimonywas given at trial by Dr. Buchanan and Dr. Sanfordwhowere, or had been at the time of the origin of this action,members of the medical staff of Hospital. In that testimony a record of violations of Hospital rules,regulations, and procedures was recited regarding Dr. Kauffman's record keeping which at various times was the subject of numerous discussions inmedical staffmeetings. Dr. Kauffman had been given several admonitions concerning the deficiencies inhis record and kesping/after adamant promises by Dr. Kauffman to keep up his records and observe the rules of Hospital,hewas given the privilege of continuing,and held fullprivileges at the times pertinent here. The record insofar as the Hospital is concerned, demonstrates

an effort to supervise the quality of medical practice within the Hospital. Additionally, Hospital's records did indicate that Dr. Bennett was on the case with Dr. Kauffman and even thoughnot present at the second surgicalprocedure did participate during the post-operative care.The question of whether or not a hospital can limit a medical license under the statute is not particularly relevant. This power has been reserved by statute to the Board of Medical Examiners and is remedial only. If a duty to "act" were found and a doctor would not voluntarily comply, a formal complaint to the Board of Medical Examinerswould satisfy that duty. Concurrent with the testimony of Drs. Buchanan and Sanford, objectionswere sustained regarding their professional opinions of Dr. Kauffman's competence to practice, alongwith several denials of offers of proof made by appellant, similar innature. The court sustained the objections and denied the offers on the basis of relevancy. Although the testimonywas relevant to liabilities of Dr. Kauffman, itwas not deemed relevant to the liabilities ofHospital. We agree for the same reasons. Knowledge within these doctors' minds, uncomrnunicated to the Board, is not

a demonstration of knowledge of the Board as a matter of law, only a matter of conscience of the individual doctors. While not necessary to sustain this Opinion, the matter of proximate causewas argued. We will note that in a direct negligence suit of this type not based on respondeat superior, the additional burden of the negligence being the proximate

cause of the injury is presented and judged by the standards approved by this Court, the evidence produced in this record fails in that regard. Sztaba

### v. Great Northern Railway, 147Mont.

The judgment of the trial court is aAfirmed.

Associate Justice

# / /chief Justice



### / \~ssociate Justices

Jack Shanstrom, District Judge, for Justice Wesley Castles.